This newspaper reports. In its latest “Commodity Markets Outlook” report, the World Bank has lowered its price forecasts for 37 out of the 46 commodities it monitors. Specifically: the forecast for crude oil prices in 2016 has been revised downward from the October estimate of $51 per barrel to $37 per barrel—a drop of 27%; and the forecast for iron ore prices has been lowered from last year’s estimate of $55.8 per ton to $42 per ton, representing a decline of 25%.

The World Bank report indicates that nearly all major commodity price indices are expected to decline in 2016, owing to persistently ample supply and, for industrial commodities, a slowdown in demand from emerging market economies. Emerging market economies have been the primary source of commodity demand since the year 2000. Consequently, the weakening growth prospects of these economies are weighing on commodity prices. The continued slowdown in growth among major emerging market economies will also dampen the growth of their trading partners and global demand for commodities.

The report states that the downward revision of crude oil price forecasts reflects the impact of numerous supply-and-demand factors, including a faster-than-expected recovery in Iranian exports, increased resilience in U.S. crude oil production due to lower costs and improved efficiency, a warmer-than-usual winter in the Northern Hemisphere, and weaker growth prospects for major emerging-market economies. According to the report, oil prices fell by 47% in 2015, and are expected to decline further by another 27% on average in 2016. However, from the current low levels, oil prices are projected to gradually recover over the course of the year for three main reasons: First, the sharp drop in oil prices at the beginning of 2016 clearly lacked sufficient justification from the perspective of fundamental oil supply and demand drivers, and there is potential for some reversal. Second, high-cost oil-producing countries are expected to suffer prolonged losses and will continue to cut production, with the magnitude of their production cuts likely exceeding the increase in new capacity entering the market. Third, demand is expected to strengthen somewhat as global growth moderates and picks up. The anticipated rebound in oil prices will be smaller than the recoveries following the oil price crashes of 2008, 1998, and 1986, and the price outlook remains subject to significant downside risks.

The report forecasts that non-energy prices are expected to decline by 3.7% in 2016. Following a 21% drop in 2015, metal prices are projected to fall again by another 10%, driven by weak demand from emerging market economies and increased production capacity. Specifically, iron ore prices are forecast to plunge by as much as 25%. By contrast, nickel prices are expected to fall by 16%, copper prices by 9%, and aluminum prices by 7%. □ (Zonghe)